British Pound Recaptures Some Losses Against Yen

The British pound has fallen initially during the trading session on Friday to continue the pullback that we had seen during the Thursday session. We reached towards the ¥156.50 level, before turning around and showing signs of support. Because it has done this, it looks as if we are trying to stabilize and continue the big move higher. Whether or not that is going to be the case is completely up for grabs at the moment, but it certainly looks as if volatility is on deck.

GBP/JPY Video 14.02.22

The ¥150.50 level looks to be a significant resistance barrier, so if we can break above there then it is likely that we could go much higher. That would more than likely be a “buy-and-hold” type of situation. This will be especially true if the market has a decided “risk on” type of situation. Furthermore, you need to keep in mind that the yield differential between the two bond markets will continue to favor Great Britain, so that is one thing that could come into the picture. All things being equal, this is a market that I think continues to see noisy behavior, but we have a lot of questions asked of the markets right now, because we have gotten so stretched. Underneath, I believe that the ¥155 level is a bit of a floor.

If we were to break down below the ¥155 level, which is where the 50 day EMA is reaching towards, then it could break this thing apart. At this point in time, that could send the market reeling and go looking towards the ¥152.50 level underneath which has been important previously.

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